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In a 4-1 vote Thursday night, the commission approved increasing the tax rate from $4.95 to $5.45 per $1,000 of taxable property value. The city will also withdraw $704,058 from its reserve fund to provide the same level of services to residents.

The lone dissenter in passage of the $19.649 million budget was Commissioner Chris Alahouzos, who said Tarpon Springs should not raise residents' tax rates in tough economic times.

Alahouzos said the city should instead reduce its expenses by cutting salaries, reorganizing the staff and eliminating vacant positions. He said the commission should lead by example and take a pay cut.

"I cannot support any millage increase," Alahouzos said. "With the economic slowdown, people losing their homes, can't pay bills. I find it unacceptable."

But Commissioner Jeff Larsen said though there is an increase in the rate, most residents will see a reduction in their tax bill.

"That's important to understand," Larsen said. "It's (tax rate increase) the right thing to do and the responsible thing to do."

Because the city's assessed property values declined 11.5 percent for fiscal year 2010-11, many residential and commercial property owners will actually see a decrease in their taxes, even with the rate increase, said City Manager Mark LeCouris.

For example, finance director Arie Walker said a commercial property with a value of $200,000 and a $25,000 exemption, with the current $4.95 rate in fiscal year 2009-10, the owner would have a $175,000 taxable value and pay $866 in taxes.

But with the property value decline, the property is now worth $160,000. Add the exemption and the taxable value is lowered to $135,000. With the proposed $5.45 rate, the owner would pay $735 in taxes.

Walker said because of the many variables with residential properties, it's difficult to determine the effect of the tax rate.

"I wish this was unanimous," Mayor David Archie said of the 4-1 vote. "But we are entitled to our own opinion."